Alcan Inc. (NYSE:AL) shares rose $20.13, or 32.98%, to $81.14 after rival Alcoa Inc. (NYSE:AA) issued a hostile $33 billion - or $73.25 per share - bid for the company. The deal would create the world's largest aluminum company with annual revenues of $54 billion.

Alcoa CEO Alain Belda commented, "We are very disappointed that those efforts [past negotiations for a buyout] did not result in a negotiated transaction - a conclusion we would have strongly preferred. We believe firmly in the compelling strategic rationale behind the combination of Alcoa and Alcan and are convinced that this transaction creates substantial value for both sets of shareholders and for customers around the world. We are therefore taking our offer directly to Alcan shareholders."

Clearly, the Alcan shareholders are looking for more as shares in the company jumped swiftly past the buyout offer by more than 5%. And if enough shareholders agree, they just might get it. Not only does Alcoa want the company badly, but the merger's cost savings and resulting superior market position may justify a higher price.

The merger would generate a pretax cost savings of about $1 billion annually after three years, with 25% of that in the first year. Moreover, Alcoa plans several divestures in overlapping business segments - such as aerospace - which could help generate more immediate return on investment.

While Alcoa managers have suggested that they are confident the transaction will be approved, shareholders are still apparently banking on Alcan's board to reject the offer in hopes of something higher. Whether or not this happens remains to be seen, but this is definitely a stock to watch!

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